Former President Donald Trump and his co-defendants in his New York civil fraud case on Monday posted a bond of $175 million, following a judge's ruling that they had for years misrepresented the value of his properties. The bond is underwritten by an insurance company run by a billionaire, who got his start making high-risk, high-interest loans to car buyers with poor credit.
Don Hankey, the executive whose company provided the bond, is a little-known mogul who built his $7.4 billion fortune through car dealerships and providing subprime auto loans, according to Forbes magazine. That makes him richer than Trump, whom Forbes estimates is worth $6.4 billion, including his multi-billion stake in the newly public Trump Media & Technology Group.
Hankey, who told the Associated Press he has never met nor spoken with Trump, said his Knight Speciality Insurance company provided both cash and bonds as collateral for Trump's appellate bond. That bond is now essentially a placeholder that will guarantee payment if the judgment against Trump is upheld on appeal.
"This is what we do at Knight Insurance, and we're happy to do this for anyone who needs a bond," Hankey told the wire service.
Who is Don Hankey?
Hankey, 80, entered the auto industry in 1958 when his father acquired a share in a Ford dealership in Los Angeles. Starting as a car washer as a teenager, he later transitioned into a sales role, as mentioned in an article by the Los Angeles Business Journal last year.
Despite facing setbacks after his father's passing and the loss of their dealership stake, Hankey's family managed to repurchase the dealership a few years after he graduated, thanks to a $250,000 loan.
How did Hankey venture into car loans?
Upon regaining ownership of the dealership, Hankey targeted a niche market ignored by other dealerships: subprime borrowers. Unlike traditional car sellers who rely on banks for financing, Hankey's dealership offered loans directly to customers.
Describing scenes of customers disputing what they perceived as unfair terms, Hankey shared his experiences with the Los Angeles Business Journal.
Interview with Business Mogul Don Hankey
"During the time when we had disputes and people buying cars, it all somehow worked out. Surprisingly, those purchasing cars didn't seem to mind the disagreements happening around them," Hankey reflected.
Exploring Hankey's Diversified Portfolio
Recognizing the demand for subprime auto loans beyond Los Angeles, Hankey ventured into other business sectors. He founded Westlake Financial Services, a company that now collaborates with over 30,000 car dealerships nationwide to offer auto loans to individuals with less-than-perfect credit scores. Westlake is just one component of the Hankey Group, which manages various financial services firms, including Knight Insurance Group, the company behind Trump's bond issuance.
Political Leanings of Hankey
In an interview with Bloomberg News, Hankey disclosed his past support for Trump at the ballot box. However, he emphasized that his decision to arrange the bond for the real estate magnate was purely a business transaction. "While I did vote for him previously, this deal is solely based on business principles. I have never had any direct communication with Donald Trump," Hankey clarified.
Axos Bank, in which Hankey is one of the biggest non-institutional investors, provided the funding to refinance Trump Tower and take out a $100 million loan in 2022, when the Trump Organization's real estate valuations were under scrutiny due to the New York fraud case.
Understanding the $175 million bond
Appeal bonds come into play when a defendant decides to appeal a court ruling, effectively putting a hold on enforcing the financial judgment while the legal process unfolds.
Insurers typically issue the bond once they have verified collateral and charge a fee, usually between 1% to 2% of the bond amount, according to insurance broker NFP. This means that Trump might be shelling out up to $3.5 million annually for the bond guarantee from Knight Insurance.
If Trump succeeds in his appeal, he won't owe the state anything and will receive a refund of the bond.
"As promised, President Trump has posted bond. He is eager to defend his rights on appeal and overturn this unfair verdict," stated one of Trump's attorneys, Alina Habba.
